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November 29, 2022

Romanian banking system suffers record losses of RON 2.1 bln, media

The preliminary financial results of the 40 credit institutions active on the Romanian market indicate record cumulated losses worth RON 2.12 bln last year, almost three times higher than in 2011, Ziarul Financiar reports, using data provided by the National Bank of Romania. In 2008, the system had posted the highest gains in history, exceeding RON 4.4 bln. In 2011, the cumulated losses of banks reached RON 777 M, after a total loss of approximately RON 516 M in 2010. 2012 was the third consecutive year when the banking system posted a negative result, with the most significant increase of the volume of losses. This was fueled by the worsening process of deterioration of the quality of loan portfolios, along with a declining volume of loans, as the production of new loans has collapsed and several banks sold packages of bad assets. Negative results were equally reported by small and large banks. According to provisional calculations made by the Central Bank, the rate of bad loans at the end of last year throughout the system advanced to 18.2 pc, almost four percent points above the level registered the previous year. The increase is no surprise, because the economy has not recovered, insolvency cases continued to appear among companies and many of the loans that were restructured in the first years of crisis now cumulated new delays and re-entered the category of bad loans. Moreover, the banking market was shaken by series of fraud rows that are still being investigated, and the high rate of bad loans also suggests weaknesses of the risk evaluating system. For losses of RON 2.1 bln, the yield of the capital in the system remained in the red (-5.4 pc). Same as during previous years, BNR continued to put pressure on the shareholders of banks with negative results, asking them to bring supplementary capital contributions, so the average solvency of the system held steady at 14.6 pc at the end of last year.

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